How Medicare becomes your secondary insurance

Medicare can be your secondary insurance when you have another health plan that pays first. This happens most often when you are still working past age 65 and your employer offers health coverage, or when you have coverage through a spouse's current job. Your employer plan or group health plan pays your medical bills first, and Medicare pays what remains after that plan has paid its share.

The key difference from Medicare as primary insurance is the order of payment. When Medicare is secondary, you submit claims to your primary plan first. That plan decides what it will cover and how much it will pay. Then you send the remaining bill to Medicare, which reviews it and pays its portion based on what Medicare would have covered if it were primary.

You must be enrolled in both plans for this to work. You cannot use Medicare as secondary insurance if you have not yet signed up for Medicare Part A and Part B. If you are still working and covered by an employer plan, you may be able to delay enrolling in Part B without penalty, but you must enroll in Part A at 65 unless you meet specific work-related exceptions.

Key Takeaways

  • Your employer or group health plan pays first when Medicare is secondary, and Medicare pays after that plan has paid its portion.
  • You must be enrolled in both Medicare Part A and Part B and your other health plan at the same time for secondary coverage to work.
  • If you are working past 65 and covered by your employer's health plan, you may delay Part B enrollment without penalty, but you still need Part A.
  • Coordination of benefits rules determine how much each plan pays, and these rules vary depending on whether your employer has 20 or more employees.
  • You will receive bills from both your primary plan and Medicare, and you are responsible for any amounts neither plan covers.

When you work past 65 and keep employer coverage

If you are age 65 or older and still working, your employer's health plan becomes your primary insurance. Medicare is secondary. This is the most common situation where Medicare works as a secondary plan.

Your employer plan must cover you because of your current employment. Part-time work counts, and so does work as an independent contractor if you are considered self-employed. The size of your employer matters: if your employer has 20 or more employees, different coordination rules explore than if it has fewer than 20.

You can delay enrolling in Medicare Part B without penalty as long as you have this employer coverage and are actively working. However, you must still enroll in Part A at 65. Once you leave your job or your employer coverage ends, you have a limited window to enroll in Part B without facing late penalties. That window is typically eight months after your employment ends or your coverage stops, whichever comes first.

Coverage through a spouse's health plan

If your spouse is working and you are covered under their employer health plan, that plan is primary and Medicare is secondary. This applies whether your spouse is younger than 65 or also 65 or older. The rule is based on current employment, not age.

You must be enrolled in both Medicare Part A and Part B for Medicare to coordinate with your spouse's plan. If you are not yet 65, you cannot enroll in Medicare, so this situation does not explore until you reach 65. Once you turn 65, you should enroll in Medicare even though you have your spouse's coverage, so that Medicare can serve as secondary insurance.

If your spouse's coverage ends — because they retire, change jobs, or lose employment — you will need to understand how that affects your coverage. Some people move from having Medicare as secondary to having Medicare as primary. Others may have a gap in coverage if they do not enroll in a Medicare plan quickly enough.

How coordination of benefits works

When you have two insurance plans, they must coordinate so you do not receive more in benefits than your actual medical costs. The primary plan pays first based on its own rules and coverage limits. The secondary plan then decides what it will pay.

Medicare's coordination rules depend on the size of your employer. If your employer has 20 or more employees, Medicare will not pay anything until your employer plan has paid its full share. Your employer plan pays as if Medicare did not exist. If your employer has fewer than 20 employees, Medicare may pay first in some situations, and your employer plan pays second.

In practice, this means your bills go to your primary plan first. You receive an explanation of benefits showing what that plan paid and what you owe. You then send that bill and the explanation of benefits to Medicare. Medicare reviews it and sends you another explanation of benefits showing what Medicare will pay. You are responsible for any remaining balance.

What you pay when Medicare is secondary

Your out-of-pocket costs depend on what both plans cover and how much each one pays. You will have premiums, deductibles, and copayments or coinsurance for both plans, though your employer plan may cover some or all of Medicare's premiums.

Your employer plan typically has its own deductible and copayments. Once you meet that plan's deductible, it begins paying its share. Medicare has separate deductibles for Part A (hospital coverage) and Part B (doctor and outpatient coverage). You must meet Medicare's deductibles as well, unless your primary plan's payment counts toward Medicare's deductible — this varies by plan.

Many people find that having two plans actually lowers their total out-of-pocket costs because one plan may cover what the other does not. However, you cannot receive more in total benefits than the actual cost of the service. If your employer plan pays $500 and Medicare would pay $300, but the service cost $600, you pay $100. You do not receive $800 in benefits.

Enrollment and timing issues

You must enroll in Medicare Part A at 65 even if you have employer coverage. Part A is hospital insurance and does not have a monthly premium if you or your spouse paid Medicare taxes while working. Delaying Part A enrollment can result in penalties that last for life.

Part B enrollment can be delayed without penalty if you have employer coverage through current employment. However, you must enroll in Part B within eight months after your employment ends or your employer coverage stops. If you miss this window, you will pay a penalty for each year you were not enrolled.

When you do enroll in Part B, tell Medicare that you have other coverage. This helps Medicare coordinate benefits correctly. You will need to provide information about your employer plan, including the plan name and your policy number.

Situations where Medicare cannot be secondary

Medicare cannot be secondary insurance if you do not have another health plan. If you retire before 65 and lose your employer coverage, you cannot use Medicare as secondary because you have no primary plan. You would need to purchase individual coverage, such as a Marketplace plan, until you reach 65 and can enroll in Medicare as your primary insurance.

Medicare also cannot be secondary to coverage that is not considered a group health plan. Accident insurance, critical illness insurance, or hospital indemnity plans do not count as primary insurance for coordination purposes. If these are your only other coverage, Medicare would be primary.

If you have Medicaid (state health insurance for low-income people) in addition to Medicare, Medicaid is usually secondary to Medicare, not the other way around. The coordination works differently than with employer plans.

What to do if you have questions about your coverage

Contact your employer's benefits department or human resources office to understand how your employer plan coordinates with Medicare. They can tell you whether your employer has 20 or more employees, which affects coordination rules, and what your plan will cover as primary insurance.

Call Medicare at 1-800-MEDICARE (1-800-633-4227) to confirm your enrollment status and ask how Medicare will coordinate with your other plan. Medicare representatives can also explain what Medicare will pay after your primary plan pays.

Keep copies of all explanation of benefits statements from both your primary plan and Medicare. These documents show what each plan paid and help you understand your total out-of-pocket costs. If you see charges you do not understand, contact the plan that issued the explanation of benefits.

Frequently Asked Questions

Do I have to enroll in Medicare Part B if I am still working and have employer coverage?

You can delay Part B enrollment without penalty as long as you have employer coverage through current employment. However, you must enroll in Part A at 65. Once your employment ends or your employer coverage stops, you have eight months to enroll in Part B before penalties begin.

Will my employer plan pay less because I have Medicare?

No. When your employer plan is primary, it pays as if Medicare does not exist. It uses its own rules and coverage limits. Medicare only pays after your employer plan has paid its share. Your employer plan cannot reduce its payment because you have Medicare.

What happens to my Medicare coverage when I retire?

When you retire and lose your employer coverage, Medicare becomes your primary insurance. You should enroll in a Medicare supplement plan or Medicare Advantage plan to cover costs that Original Medicare does not pay. You have a limited time to do this without penalties, so contact Medicare as soon as you know your employment is ending.

Can I use Medicare as secondary insurance if I have a Marketplace plan?

No. Marketplace plans are individual plans, not group health plans, so they do not coordinate with Medicare as primary and secondary. If you have both a Marketplace plan and Medicare, Medicare is primary. You should contact the Marketplace to understand how your plans work together.

Who do I send my medical bills to first?

Send bills to your primary plan first — the employer or group health plan. Once that plan processes your claim and sends you an explanation of benefits, forward the bill and that explanation to Medicare. Medicare will then process it as secondary and send you another explanation of benefits.